PROCUREMENT MANAGEMENT

Procurement Management

Executive Summary

This report is based on the strategic implementation of procurement methods and techniques in the supply chain of Jade Cargo which is in joint venture of Lufthansa Cargo. In comparison with the generic business enterprises where only couple of stake holders are active which are employer and the supplier, then the overall situation becomes quite difficult and critical in the aviation industry, in which the management of the procurement processes requires involvement from five stakeholders for instance; Technical Authority validating the requirement, Suppliers & Consignee/logistic depots, Users/Maintenance Department and Procurement Department. Therefore, on time provision of cost effective and quality product is of main significance for adequate sustenance of any aviation industry. It also needs proper synergy in its operations and between its stake holders. This report however, has focused on the strategic role of procurement tools and techniques in the procurement management of Lufthansa cargo.

Procurement Management

Introduction

Organizational Background

Jade Cargo International, was a cargo airline which had it's headquarter in the building of Shenzhen Airlines Flight Operations Building in China at Shenzhen Bao'an International Airport. The Jade Cargo was involved in operating cargo services at regular basis to Europe, South East Asia, and Asia and to the Middle East. Furthermore, the cargo services were also provided to number of several other destinations worldwide as well. The main base of the cargo airline was at Shenzhen Bao'an International Airport. This cargo airline was established in the year 2004, and it was also considered as the first cargo airline within China which was having foreign ownership under which 350 employees were working. Lufthansa Cargo was having 25% stake in the Jade Cargo.

Whereas, Lufthansa Cargo is one of the famous cargo airline that has is based in Germany. This cargo airline operates worldwide and provides logistic services and air freight on behalf of Lufthansa, which is entirely owned subsidiary. The office of the Lufthansa Cargo has its head quarter in the building 451 at the Frankfurt Airport in Frankfurt, which is also the main hub of Lufthansa. The cargo is not only offering services to space to its own freighters but it also holds the right to carry cargo capacity of more than 300 passengers in Lufthansa aircraft that also includes Austrian Airlines, Sun Express and Brussels Airlines (www.lhcargo.com).

In the year 2008, Jade Cargo International was formed with a joint venture among Lufthansa Cargo, Shenzhen Airlines and German Investment Corporation which is a German governmental entity that allows Lufthansa Cargo to have power presence in the Asian Markets.

Discussion

Setting up the Procurement Department

The main emphasis of setting up the procurement department in the air line cargo or passenger service is to achieve a goal of realizing global optimum technology, quality, cost and service in terms of all projects which are directly associated with external spending (Sambamurthy, 2003, pp.237 ). Following the major goal and objective of setting up procurement department eventually serves as a path for the sub a goal, which revolves around:

Saving costs

Increasing transparency

High quality of contracts

Providing an ...